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  • Writer's pictureAamer Amin

VAT on catering, takeaway food

We understand that businesses in food sector are losing on genuine VAT savings due to lack of proper advice, book keeping and right scheme of VAT. We at Amin & Co Accountants pay close attention to you and start with giving the correct advice. We use a fully digital system under the supervision of highly trained and qualified team members who prepare, review and quality check before every VAT return if filed. We go extra mile with our clients to ensure everything has been covered before filing.

VAT on food and drinks

The HMRC has a detailed guideline on how to apply VAT on food and drinks for those in the food and beverage industry. For example, zero-rated products, such as coffee beans, attract a 0% VAT charge. However, standard-rated products, such as a hot cup of tea, attract a 20% standard VAT charge.

Since you’re in the restaurant business, which falls under the catering business category, you’re expected to know which products to charge the 20% standard VAT rate and which are zero-rated. You need to understand how the VAT rules apply to avoid complications with the law.

The legal implications of VAT

Your restaurant or takeaway food business doesn’t have to register for VAT unless the annual taxable turnover exceeds the VAT threshold of £85,000. Meanwhile, your business can balance the VAT by offsetting what it pays to suppli

ers with what it collects from customers. The difference is then payable to or should be collected from the HMRC.

The challenges when working out VAT

When determining whether your products are zero-rated, you need to ask the following:

  • Does the food fall under the standard or zero VAT rates?

  • Is the food hot or cold?

  • Are your customers visiting and consuming the food on-premises, or do you supply them off-premises?

  • These questions are the first step in understanding what applies. However, you may face other challenges that may lead to problems when working out how to handle VAT

  • Using the wrong flat rate percentage

  • Understating the flat rate turnover and rules

  • Not providing enough evidence to support your VAT reclaims

  • Poor bookkeeping leading to higher VAT liability

  • Claiming a VAT reclaim twice leading to penalties

  • Failing to act upon VAT demands and notices

  • Failure to repay VAT on supplier invoices

  • Attempting to handle all VAT-related accounting complications by yourself

All these challenges are exhausting and need the right approach to ensure your business remains compliant and does not incur more costs than is necessary

How We can help

Our professional services and highly experienced team can analyze your business and determine the best approach to solving your VAT and bookkeeping challenges. Get in touch today and let us help you legally minimize your VAT liability through industry standard best practices.

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